What Are Syariah Stocks?
Syariah stocks are equity securities that comply with Islamic law (syariah) principles. In Indonesia, the Daftar Efek Syariah (DES — List of Syariah Securities) is published by the OJK (Financial Services Authority) twice a year, containing hundreds of stocks that have passed rigorous screening.
A stock qualifies as syariah-compliant if it meets two primary criteria:
1. Halal Business Activities The company must not operate in areas prohibited by syariah, such as:
- Gambling and games of chance
- Production or distribution of alcoholic beverages
- Riba (interest-based finance)
- Entertainment prohibited under syariah
2. Healthy Financial Ratios
- Interest-bearing debt to total assets ratio ≤ 45%
- Non-halal income to total revenue ratio ≤ 10%
Why Choose Syariah Stocks?
Investing in syariah stocks is not just about religious compliance. There are tangible financial benefits:
- Rigorous Screening = Healthier Businesses — The DES screening process indirectly filters out companies carrying excessive debt
- Suitable for Conservative Investors — Debt ratio limits make the portfolio more stable
- Growing Ecosystem — Syariah mutual funds, sukuk (Islamic bonds), and syariah ETFs continue to expand
How to Start Investing in Syariah Stocks
Step 1: Open a Syariah Securities Account
Choose a broker that offers a dedicated syariah account. Most major brokers in Indonesia now provide this feature.
Step 2: Study the Latest DES
Download the most recent Daftar Efek Syariah from the OJK website. The list is updated every May and November.
Step 3: Analyze Before You Buy
Don't buy a stock simply because it is syariah-compliant. Always analyze:
- Fundamentals: financial statements, business prospects
- Technicals: price trends, support and resistance levels
- Valuation: is the current price fair?
Step 4: Diversify
Don't put everything into a single stock. Spread your investment across multiple sectors.
Syariah Stock Indices in Indonesia
| Index | Description |
|---|---|
| JII (Jakarta Islamic Index) | Top 30 syariah stocks by market capitalization |
| JII70 | 70 selected syariah stocks |
| ISSI (Indeks Saham Syariah Indonesia) | All stocks included in the DES |
| IDX-MES BUMN 17 | 17 state-owned enterprises (and subsidiaries) listed in the DES |
Tips for Beginners
- Start with what you know — choose companies whose products or services you use in daily life
- Be consistent — regular investing matters more than finding the perfect entry point
- Be patient — stock investing is a long-term game
- Keep learning — markets are always changing; knowledge is your most valuable asset